Even as the federal government on Thursday touted the billions of dollars in savings seniors can expect to see from newly negotiated, lower drug costs, pharmacies that supply long-term care facilities are warning of dire consequences.
The Centers for Medicare & Medicaid Services announced Thursday morning that it had reached an agreement with drug makers to lower the list prices Medicare would pay for 10 of the most expensive drugs that are frequently prescribed to seniors by 38% to 79%.
The drugs are: Eliquis; Jardiance; Xarelto; Januvia; Farxiga; Entresto; Enbrel; Imbruvica; Stelara; and Fiasp, Fiasp FlexTouch, Fiasp PenFill, NovoLog, NovoLog FlexPen, and NovoLog PenFill.
The new prices will go into effect Jan. 1, 2026.
Congressional budget estimators predicted about $100 billion savings over 10 years from drug negotiations, and a $3.7 billion savings in the first year alone, said US Department of Health and Human Services (HHS) Secretary Xavier Becerra in a press release.
“Today we’re announcing that in our first year of negotiations we are saving Medicare an estimated $6 billion and Americans who pay out of pocket will be saving another $1.5 billion moving forward,” Becerra said. “Empowering Medicare to negotiate prices not only strengthens the program for generations to come, but also puts a check on skyrocketing drug prices.”
Patients happy, providers wary
The announcement was cheered by consumer advocates such as AARP.
“AARP members from across the political spectrum overwhelmingly called lowering prescription drug costs a top concern — and this first round of Medicare-negotiated prices will bring financial relief to millions of older Americans” AARP Executive Vice President and Chief Advocacy and Engagement Officer Nancy LeaMond said in a statement.
Top advocates for long-term care pharmacies, however, cautioned that, while they support lowering costs for seniors, the steep discounts will put even more pressure on these companies, which are already struggling to remain profitable.
“Our financial impact studies predict these cuts will make it difficult for many LTC pharmacies to remain in business and serve the unique needs of their patients,” Alan Rosenbloom, president and CEO of the Senior Care Pharmacy Coalition, said in a press statement. “[T]he lower prices will become effective against the backdrop of a perverse Medicare Part D reimbursement model that is driven by the increasingly abusive practices of pharmacy benefit managers.”
Long-term care pharmacies are reimbursed approximately 25% of the costs required to provide legally required services by pharmacy benefit managers (PBMs). Rosenbloom said that payment structure leaves the pharmacies reliant on the revenues from high-cost drugs to stay in business.
Drugs with the biggest hits
The steepest negotiated discount is for Januvia, which is used to treat diabetes. A 30-day supply for a Medicare Part D enrollee will be $113, down 79% from the list price of $527, according to the CMS fact sheet released along with the announcement. Last year, 843,000 Part D enrollees used this drug. The lowest negotiated price drop is for Imbruvica, used to treat blood cancers, and discounted 38% from the list price of $14,934 down to $9,319 for a 3-day supply.
The most commonly prescribed drug – Eliquis, which is used to prevent and treat blood clots – was used by nearly 4 million Part D enrollees last year and will cost $231 for a 30-day supply after a 56% discount on the list price of $521, per the factsheet. Jardiance, used to treat diabetes, heart failure, and chronic kidney disease, will drop 56% from the list price of $573 for a 30-day supply to $197. Last year, it was prescribed to 1.8 million Part D enrollees.
In total, the 10 drugs made up approximately 20% of Medicare Part D total spending last year, and seniors enrolled in the program spent $3.4 billion in out-of-pocket costs for them in 2022, according to CMS’ press release. The total Part D spending for the selected drugs more than doubled from 2018 to 2022, according to the agency.
CMS is expected to announce by Feb. 1, 2025, up to 15 more medications that would be part of a second round of negotiations to lower drug costs. President Joe Biden vowed to end “Big Pharma’s” stranglehold on prescription drug prices in March 2024. during his last State of the Union address.
Rosenbloom has previously told McKnight’s that the prices for the kinds of respiratory inhalers used by COPD patients are expected to drop next year while insulin prices are already down 70% across many formularies.
PBMs spell trouble
In July, SCPC launched Save Senior Rx Care, a national advocacy campaign to focus attention on the significant dispensing costs that long-term care pharmacies have that do not exist for commercial and independent pharmacies. In that same month, the Federal Trade Commission released a report that found six of the largest PBMs controlling nearly 95% of all prescriptions filled in the country.
That concentration of power has won the attention of lawmakers, but they might not realize that limiting PBM tactics and suppressing prices on in-demand drugs for seniors at the same time could pull the rug out from long-term care pharmacies, according, per reporting from McKnight’s Long-Term Care News.
One of those PBMs handles drug negotiations for 47% of long-term care residents in the US, the American Society of Consultant Pharmacists said.
A CliftonLarsonAllen analysis found that the average long-term care pharmacy spends more than $15 per prescription on clinical, specialty, and delivery services while Medicare Part D pays just $4 per prescription. The pharmacies tend to lose money or barely break even on delivery drugs so the ones that work with nursing home clients can make up those losses through the higher-priced drugs, experts have said.
Now that the new drug prices have been announced, LTC pharmacies can begin calculating the actual impact on their bottom line, said Chad Worz, CEO of the American Society of Consultant Pharmacists, in a statement to McKnight’s.
“From the beginning, our concerns have focused on the potential negative impact on patients through medication access and pharmacies through reduced reimbursement making continued operations impossible,” Worz said. “Moving beyond these prices and the negotiations, this new reality showed the imperative for a professional dispensing fee on all prescriptions, especially in long-term care. Ensuring safe patient access to necessary and life-saving medications is paramount and requires the skills and expertise of a pharmacist; their services should be fairly reimbursed.”
